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Argentina blames Shell, Petrobras for gasoline shortages

March 11, 2010 at 4:36 PM   |   Comments

BUENOS AIRES, March 11 (UPI) -- Yet another political row is brewing in Buenos Aires over gasoline shortages that the government contends shouldn't be occurring and are directly the result of Royal Dutch Shell and Brazil's Petrobras manipulating the market.

Shell denied the charge but news of Argentina having to import gasoline for the first time in 30 years has dismayed the nation and added to criticism of President Cristina Fernandez de Kirchner's style of government.

This week, former President Eduardo Duhalde, who ruled Argentina 2002-04, took Fernandez to task for abandoning reconciliation for a policy of confrontation. He said the government had become an embarrassment for Argentina.

Reasons for the gasoline shortage remain mired in controversy. Argentine media speculated the shortage could be genuine and is a result of cash-strapped Argentinians staying home and resorting to local tourism instead of visiting abroad.

The government faults Royal Dutch Shell and Petrobras, however. Senior government officials accused the companies of deliberately causing gasoline shortages to force rival YPF, the Argentine unit of Spanish oil major Repsol, to raise its prices. Senior also officials complained to Brazil about Petrobras operations in Argentina.

"Shell and Petrobras are disrupting the refining of oil to create a shortage in the domestic market and force YPF to increase its prices," Planning Minister Julio De Vido said in a statement.

He said the government would be taking measures to ensure oil refineries in the country worked at full capacity and warned fuel exports by the refiners would be curbed if the shortages continued. It was not clear from the statement if the government suspected refiners of producing below capacity but the statement set the mood for more confrontation between the government the oil refining sector.

Domestic Commerce Secretary Guillermo Moreno said the government's plans to counter the shortages included inspection raids on service stations.

The controversy broke a day after YPF said it would import 315,000 barrels of gasoline from the United States to meet demand that current stocks can't meet.

YPF also accused its competitors of supplying less than needed gasoline to the service stations as a way way to force YPF to raise its prices, which are lower than those set by Shell and Petrobras.

YPF has the largest share of Argentina's gasoline market, at about 60 percent. YPF and industry analysts explain YPF is able to sell its gasoline cheaper because its operating costs are lower than those borne by Shell and Petrobras.

Added to YPF savings on production are government price controls, designed to ensure fuel costs remain below the international average and do not impact on public transportation costs, prices of food and other consumer items.

A row over fuel prices is the last thing embattled Fernandez needs, analysts said. Service station unions have already hinted they will go on strike to resist government pressure.

Analysts said a deeper issue was the growing resentment over the state control of various sectors of the economy, which has already pitted Fernandez against farmers and other exporters in the business community.

Before Fernandez came to power in 2007, her husband and former President Nestor Kirchner also had a running quarrel with Shell and threatened to put Shell Argentina's president behind bars to force the company to comply with government price controls.

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